The NonProfit Sector Must Move From Transaction to Collaboration

We’re Measuring Ourselves To Death When We Should Be Working to Understand How to Get Better Together

This summer I spent three days at The Collaborative, an event that brings together the best and brightest from the nonprofit world (a video is at end of this story). Across all of the panels I attended and the conversations I had, one theme stuck out: Too often it feels like funders and nonprofits are sitting on opposite sides of the table. Without a shared view of success, the grant-making relationship has become transactional rather than collaborative.

Modern philanthropy has created a problematic culture of KPIs. It’s something we don’t like talking about, but it’s harmful for both foundations and the nonprofits they support. Success has become equated with charts and reports that look nice and validate metric-driven theories. But are we really learning anything? Behind the scenes, I hear the term “necessary evil” far too often.

Case in point: I recently had the opportunity to gather a group of funders and nonprofits together in a room to talk about measuring impact. We started with the grant makers. They explained their logic models, their suggestions for common taxonomies, their reasons behind certain metrics. It was all very detailed and very thorough work. And then we turned to ask the grantees about their approach to measuring impact, and they responded: “Well, we’ve got metrics, but what do the funders want to hear?”

It turns out they all had a wealth of data and knowledge around their mission, all captured during the normal course of their work. But a lot of it was going wasted, simply because funders weren’t asking for it.

The point is, a foundations’s job is not simply to give grants. And a nonprofit’s job is not to get grants. Period. Yet too often it seems that way. Nonprofits must contort themselves, doing whatever is necessary to get a grant, and funders must ignore that sinking feeling in their gut that the numbers don’t describe the full value of the work.

The majority of the time, the jobs of nonprofits and funders are the same — to focus time, energy, resources, and passion on driving change within the most important challenges of our time. But that’s rarely the way we see the relationship play out.

I know this first hand from serving as CIO at a large international foundation. We provided over 1000 grants and $21 million per year to help build a strong, clean energy economy. We moved incredibly fast, and as CIO, I was in charge of figuring out how we measured our success. As a grantmaker and a numbers guy, I was focused entirely on the data. Everything had a metric. Everything had a KPI. Even the KPIs had a KPI, and they were used to make beautiful reports that made us all feel great.

What I came to realize, though, was that in approximating impact through numbers alone, we were failing to tell the real story. And at the end of the day, it’s all about the story. It’s about the mission, the change that can impact a life, or a community, and even the world. Numbers don’t inspire that kind of action and change. Stories do.

Stories alone don’t replace fully-realized program evaluation, of course, but stories do shift the focus to the on-the-ground reality of nonprofits in a way that most annual reports don’t. Shared stories increase the pace of learning and can precipitate change for real impact. Stories don’t replace numbers, but they bring numbers to life.

Who knows how many opportunities we’ve missed as funders by failing to provide a space for our grantees to share the stories they knew were critical to our overall impact?

We need to rethink the relationship between funders and nonprofits. It starts with admitting our biases. This doesn’t mean that KPIs aren’t important or even necessary, but it does require a recognition that funders empower nonprofits to make good on their missions, and part of that means carving out space for nonprofits to bring their invaluable experience to the table.

This shift in thinking requires a change of perspective for nonprofits as well. The “necessary evil” perspective so often held towards much of the grant funding process is hampering what should be a productive partnership. For so long, nonprofits have chased funders’ money and metrics that many have lost sight of the value that foundations can bring beyond their checkbooks.

So let’s pause and reset. What does the future of nonprofit funding and action based on shared values of success look like?

I often point to an example of Fluxx’s foundation partners working in Malawi, Africa, leading an initiative to fund investments in micronutrient powders. They were focused on three official measures: Availability, Awareness, and Consumption. This story isn’t about the metrics, though; it’s about a commitment to communication. The nonprofit on the ground and their funders were committed to communicating openly and iteratively throughout the life of the grant. And they followed through on that commitment.

Rather than simply providing a report at the end of the grant’s cycle, answering to the foundation’s KPIs, they worked collaboratively throughout the life of the project.

The project started off well, and they quickly hit targets for Availability and Awareness. Yet Consumption, a critical metric, was stuck at 40%. So together they looked at the data they’d been collecting. The solution was actually incrediblyobvious. The places where they were giving out packets were not close enough to the communities that needed them most. So they moved the distribution centers.

Under typical circumstances, the foundation would not have realized what was going on until the final report was submitted. In this case, however, the group used real-time data to create insight into the progress of their work midstream, and this made all of the difference — consumption numbers more than doubled.

The group was able to pivot strategy in response to what they were learning on the ground and consumption numbers more than doubled. This is for me an incredible example about how better information sharing and tighter communication allows us to capitalize on insights, right now.

This is what we need to see more of in the nonprofit world: better collaboration and greater transparency on both sides. Instead of reporting on formal requirements alone, we need to document real-world learnings iteratively. A change in how we interact with each other can disproportionately impact how effective we are are on the ground.

With a frictionless, free-flow of insights, nonprofits can share the stories and capture the moments that give us a continuous, big-picture view. This knowledge sparks curiosity, and it sparks action. It allows the everyday work — the boots on the ground — to be seen, heard, and supported.

Foundations believe in and desperately want this future too. But to get there we all have to be willing to look in the mirror, and we have to be intellectually honest with each other. None of us is as good, smart, or impactful as all of us.